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Home >News >India >Finance Ministry approves 9,879 cr capital expenditure proposal of 27 states

The Finance Ministry (MoF) on Saturday said it has approved 9,879.61 crore worth capital expenditure proposals of 27 states. Of this, 4,939.81 crore has been released as the first installment.

In a statement, the MoF said all states, except Tamil Nadu, have availed benefits of the newly-announced scheme for 'Special Assistance to States for Capital Expenditure', which was announced on 12 October, as part of AatmaNirbhar Bharat package.

"So far capital expenditure proposals of 9,879.61 crore of 27 states have been approved by the Ministry of Finance. An amount of 4,939.81 crore has already been released to the states as the first instalment under the scheme," it added.

The ministry also said that the scheme is aimed at boosting capital expenditure by the state governments who are facing a difficult financial environment this year due to the shortfall in tax revenue arising from the COVID 19 pandemic.

"Capital Expenditure has a higher multiplier effect, enhancing the future productive capacity of the economy, and results in a higher rate of economy growth. Therefore, despite the adverse financial position of the Central Government, it was decided to extend a special assistance to the state governments in respect of capital expenditure, in financial year 2020-21," it added.

The capital expenditure projects have been approved in diverse sectors like, health, rural development, water supply, irrigation, power, transport, education, urban development.

As part of the AatmaNirbhar Bharat Package, the Centre had announced that the government will offer 12,000 crore special interest-free 50-year loan to states, exclusively for capital expenditure.

The Scheme has three parts:

Part –I of the scheme covers the north-eastern region. Under this part, 200 crore is allocated to 7 north-eastern States (Arunachal Pradesh, Meghalaya, Manipur, Mizoram, Nagaland, Sikkim and Tripura).

In view of a higher population and geographical area, Assam has been allocated 450 crore under the scheme.

Part-II of the Scheme is, for all other States not included in Part-I. An amount of 7,500 crore is earmarked for this part.

This amount has been allocated amongst these States in proportion to their share of central tax as per the interim award of the 15th Finance Commission for the year 2020-21.

Part-III of the Scheme is aimed at pushing various citizen-centric reforms in the States.

Under this Part, an amount of 2,000 crore is earmarked. This amount will be available only to those states who carry out at least 3 out of the 4 reforms specified by the Ministry of Finance in its letter dated 17th May, 2020 regarding reform linked additional borrowing permissions.

The 4 reforms are - One Nation One Ration Card, Ease of doing Business Reform, Urban Local Body/ Utility Reform and Power Sector Reform.

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